When meat-eaters ask a good question

Sometimes people who defend meat-eating come up with good questions for us - even if they themselves could care less about the answer. Here's one Chris wrote about in comments to the last post:

if factory farming no longer existed, what would become of the cows that now exist?

First off, unless veg*nism were implemented all of a sudden (following a ALF coup, perhaps), the number of livestock would gradually decrease as more and more people stopped eating them and the industry lost the incentive to rapidly reproduce them. So we'd have more manageable numbers once everyone was veg*n, but the domesticated animals would still be around.

So here's my question - would keeping livestock on farms and treating them well be exploitation? I recently read a series of well-informed posts from an environmentalist arguing that the only kind of agriculture both sustainable and practicable is one built on small-scale mixed farms that incorporate raising and killing animals for food (scroll down and read the four posts November 12-18). As I pointed out in the comments on his November 18 post, his argument for meat rests on the financial necessity of these small farms surviving in a world of low-cost factory farms, and wouldn't seem to apply if factory farms were eliminated or if the economy set prices differently (under, e.g., a parecon). So killing animals doesn't seem necessary, but farms still seem more efficient if they incorporate animals.

farms work best, maximising yield and minimising inputs, with an integrated relationship is fostered between plants and animals. Our grandparents knew this to be self evident, Permaculture espouses it, and nature wouldn't function any other way. The best way to cycle nutrients on a farm is to use our microbial friends (soil and compost) and animals to make nutrients available in a form that plants can use to create surplus calories from the sun which can then feed us humans and the animals. It’s a nice tidy system. Without animals on the farm, you invariably need to import fertilizer or organic matter to make the needed tons of compost, incurring transportation costs and burning more fuel. And even then, raw manure, especially urine, is still the best fertilizer. By splitting the system we are wasting energy to poorly mimic what nature will give us for free.

If the farm animals were treated well, would this be exploitation? Even if they were used for (small amounts of) milk and eggs, wouldn't this be more of a symbiotic relationship than one of exploitation? Or am I way off base here?